Massachusetts citizens should loudly vote against the state’s three ballot questions on Nov. 2.
Question 1 would remove sales tax on alcohol, as an excise tax is already imposed on liquor, as it is with such commodities as cigarettes and gasoline. The 6.25 percent sales tax was levied on alcohol starting in the summer of 2009 as a supplemental means of securing revenue, with the state facing a total debt starting Fiscal Year 2011 of $61.5 billion, when adding the Commonwealth’s outstanding debt, pension debt, Other Post Employment Benefits (OPEBs) and Unfunded Actuarial Accrued Liabilities (UAALs), unemployment trust funds and the budget gap, according to the Sunshine Review.
While as college students, it might be nice to get a 6.25 percent break on booze, our excise taxes on liquor are significantly lower than those of many states you might think would impose less than “Taxachusetts.”
In the Bay State, we pay a $4.05 tax per gallon of spirits (that’s a little under $2 for a 1.75 liter handle), a $.55 tax on wine per gallon (not too bad, only about 14 cents a bottle), and an 11-cent tax on beer per gallon, roughly 33 cents for a 30 pack. Compare that to Alabama, which levies a tax of $18.78 per gallon on spirits, Alaska, $12.80, Idaho, $10.96, Iowa, $12.47, Michigan, $10.91, Montana, $8.62, North Carolina, $13.39, Oregon, a whopping $24.63, and Washington, an even steeper $26.45, according to the Tax Foundation. Maybe tacking on the sales tax to the existing excise taxes simply brings us closer to some of those states.
Based on the state’s current budget gap of $2.8 billion – $2.8 billion it simply doesn’t have – every penny counts, and we cannot cut state revenues staring down such a huge hole. The idea that we can cut a means of state funding as way of improving the state’s budgetary situation simply does not work. The meager additional 6.25 percent consumers spend on liquor is not breaking their banks, and it should be posited that those who drink heavily will likely find a way to get their booze, even if they face a 6.25 percent hassle.
According to the non-partisan Massachusetts Taxpayers Foundation, if the alcohol tax question and Question 3, which would reduce the sales tax to three percent starting next year, pass, the state budget gap for FY 2012 will widen to $5 billion. While the state already faces a gap of $2.8 billion, the passage of these two measures would force the state to cut widely from many of its most essential programs.
Further, heavy alcohol use ultimately costs the public money in emergency room costs, police, fire and emergency personnel fees. The state should use taxes on liquor to fund anti-drinking and rehabilitation programs.
According to a Sept. 26 piece in the Patriot Ledger’s Mass. Market blog, sales on alcohol rose roughly four percent in the first two months of fiscal year 2011, July and August, meaning times can’t be too tough, anyways, for the spirit industry here in Massachusetts.
In addition, since the new law went into affect at the start of last fiscal year, it has generated $110 million, according to the Taxpayers Foundation.
Question Two would do away with a state law that allows developers seeking to build low or moderate-income housing to obtain a single, uniform permit from a city or town zoning board of appeals, rather than being required to garner permits from each local board individually.
According to the U.S. Census Bureau’s American Community Survey (ACS) for 2009, which surveys data about the makeup of states and cities, Massachusetts has the fifth-highest home property rates in the nation, trailing just Hawaii, Washington, D.C., California and New Jersey. The Bay State also had the 10th-highest average rental price per month, at $988 per month, a rate few lower-to-middle income citizens can afford.
Massachusetts’ Affordable Housing Law simply makes sense.
It encourages developers to build affordable housing by providing an incentive, fewer bureaucratic hurdles to jump through, fewer permit fees, a smoother process, and states that at least 25 percent of homes in a given development must be affordable to those households earning less than 80 percent of the area’s median income. Why would we do away with a law that promotes the creation of affordable housing, makes life easier for developers, encouraging construction and thus stimulating the economy, and cutting down on bureaucratic red tape? That simply does not make sense.
Lastly and probably most importantly, as much as we might all like 3.25 percent of our every purchase back, right now, we’ve got to give a little to get a lot more back. With the state facing the aforementioned budget gaps and deficits, it simply cannot afford to chip away from the revenue it so sorely needs. If we choose to scale back our taxes to three percent, we will be putting ourselves into an even deeper hole, and the 3.25 percent extra cash we have on hand for consumer purchases simply will not bridge that gap.
Buying 3.25 percent more at the grocery store or the mall simply will not infuse the economy beyond the hurt Bay State citizens will suffer if the state is forced to cut further from education, welfare, health care, public safety or other areas. As mentioned, the state faces a $2.8 billion budget shortfall, and the Mass. Taxpayers Foundation predicts that, with the passage of this question and question one, that would increase to $5 billion. Beyond that, the Commonwealth could run such a great debt, that the Taxpayers Foundation predicts the state will lose its AA credit rating if the question passes.
“It is not an exaggeration to say that the resulting massive spending cuts would eliminate or erode a wide range of services – from education to public safety to health care and human services – that for decades the citizens of Massachusetts have counted on the government to provide,” the Foundation wrote in its September report.
Beyond all of that, Massachusetts sales tax is relatively low at 6.25 percent, based on the state’s cost of living and average income. Of 45 states with a sales tax, adjusted for per capita income, the 6.25 percent is just 43rd, according to the Foundation’s report. The Commonwealth earns 20 percent of its total tax revenue from sales tax. Can we really afford to cut that beneath 10, already billions in debt? All four gubernatorial candidates oppose the measure and that ought to say enough. Question Three would result in a reduction in revenue of nearly $992 million just the rest of this fiscal year, until July, and then a $2.5 billion reduction by FY 2012. We are already too strapped to pass this initiative.
With Massachusetts in precarious financial straits, we need all of the revenue we can pump into social services. While it might be nice to have a few extra pennies in our pockets and purses, what we would lose if we pass these three questions vastly outweighs the few cents per dollar we would get back.
Unsigned editorials represent the majority opinion of the Massachusetts Daily Collegian editorial board.